Office absorptions and investments into real estate to surge in 2022

Gross absorption in office space is expected to touch 45-47 million square feet in 2022, registering a growth of about 13-14% compared to last year, while a 4-5% increase is expected in the new office space with around 51-53 million sq. ft. set to get operational during the year.

Technology firms would continue to dominate leasing in 2022, while flexible space operators, BFSI, engineering and manufacturing, and life sciences segments are expected to contribute to the growth in office space take-up significantly, according to CBRE India Market Outlook Report 2022. Similar to 2021, Bangalore, Hyderabad and Delhi-NCR are expected to continue to drive transaction activity in 2022.

While physical offices are here to stay, along with hybrid working; occupier appetite for office expansion is strengthening. Workplace strategies would evolve to suit the new role of the office, as it becomes a centre of collaboration and means to improve productivity levels. Leasing activity is also expected to remain strong in 2022 and touch 35-37 million sq. ft, a growth of more than 20% on an annual basis.

Warehousing space take-up is expected to rise further in 2022, with continued upgradation/expansion opportunities in tier-I cities, new market penetration in lower-tier cities and the extension of local distribution networks in emerging logistics hubs will aid this growth. About 32-34 million sq. ft. of new warehouse space is expected to become operational in 2022.

Rents across cities continued to rise in 2021 with Hyderabad, Mumbai, Ahmedabad, Chennai and Pune registering growth in the range of 10-20% and cities such as Kolkata, Bangalore and Delhi-NCR recorded a 2-7% year-on-year increase. The rental growth momentum is expected to continue across cities in 2022 as well.

In 2021, the total capital inflows into real estate stood at $5.5 billion on the back of a rebound in all asset classes. According to CBRE, the investment activity in real estate is expected to witness an uptick, with total investments in 2022 expected to rise by about 5-10%, to reach around the pre-pandemic levels of 2019.